Soldiers of Fortune

How does Israel—with fewer people than the state of New Jersey, no natural resources, and hostile nations all around—produce more tech companies listed on the NASDAQ than all of Europe, Japan, South Korea, India, and China combined? How does Israel attract, per person, 30 times as much venture capital as Europe and more than twice the flow to American companies? How does it produce, for its size, the most cutting-edge technology startups in the world?

There are many components to the answer, but one of the most central and surprising is the Israeli military's role in breaking down hierarchies and—serendipitously—becoming a boot camp for new tech entrepreneurs.

While students in other countries are preoccupied with deciding which college to attend, Israeli high-school seniors are readying themselves for military service—three years for men, two for women—and jockeying to be chosen by elite units in the Israeli military, known as the Israel Defense Forces, or IDF.

As selective as the top Israeli universities are, certain commando, intelligence, Air Force, and high-tech IDF units are even more so. The prestige of these units makes them the national equivalent of Harvard, Stanford, and MIT for the Israeli tech world. Even outside the elite units, the military experience of Israeli job applicants tells prospective employers what kind of selection process they navigated, and what skills and relevant experience they may already possess.

For Americans, the idea that military service can be great training for business is surprising. "Innovation" is hardly the first word most people associate with the military. "Improvisation" is even less likely to come to mind. And "flat"—as in anti-hierarchical and informal—would be completely counterintuitive. Yet these are exactly the attributes that employers have come to expect from young people emerging from their stint in the IDF.

Talk to an Israeli Air Force pilot and you will see why. "If most air forces are designed like a Formula One race car, the Israeli Air Force is a beat-up jeep with a lot of tools in it," one pilot told us. A U.S. Air Force "strike package" often consists of four waves of specialized aircraft: a combat air patrol to clear a corridor of enemy aircraft; a second wave to suppress enemy antiaircraft systems; a third wave of electronic-warfare aircraft, refueling tankers, and radar aircraft; and, finally, the strikers themselves—planes with bombs. In the Israeli system, almost every aircraft is a jack-of-all-trades. "You do it yourself," one pilot noted. "It's not as effective, but it's a hell of a lot more flexible."